China's potential growth may slow later in decade

China's potential growth rate may slow by 1 percentage point in the second half of the decade as its labor force shrinks, according to a senior demographics adviser to the nation's leadership.

The annual rate will drop to 6.1 percent in 2016-20 from 7.2 percent in 2011-15 and actual 11.2 percent growth from 2006 to 2010, said Cai Fang, head of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences.

Speaking at a forum in Beijing on Monday, Cai explained potential growth is commonly known as a speed limit, or the maximum pace at which an economy can expand without stoking inflation.

Cai said the size of China's labor force peaked in 2010, putting the country in a situation similar to that of late 20th-century Japan, where growth slowed once the workforce began shrinking.